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Tapering over the cracks

Jeremy Beecham on the deep flaws running through the ‘pay to stay’ provisions of the Housing Bill

One of the most pernicious provisions in the Housing and Planning Bill is the plan to impose large rent increases on, what Ministers determine to be, ‘high income’ council tenants. And to permit housing associations, who will at least have choice in the matter, to do likewise.

Four years ago, the then Coalition government consulted on this idea and appeared to settle on a threshold of household income of £60,000 per annum. But even that presented difficulties. What constitutes such income? What if earnings fluctuated? How up to date would information be from HMRC? Then, when Ministers eventually came forward with the current Bill, the threshold had mysteriously fallen to £40,000 for London and £30,000 elsewhere. That means couples living together on either the London Living Wage or National Minimum Wage would very probably be caught out by the new provision.

The LGA forecast that 214,000 households would be affected nationally, with 60,000 set to leave their homes. London Councils estimate 28,000 households would be affected in the capital, most notably in the inner boroughs. In Newcastle-upon-Tyne, some 500 tenants face a rent rise of between £35 and £60 per week and it would cost the city council over £150,000 a year to administer.

The entire policy is based on a false premise that people are living in taxpayer subsidised housing, whereas local authorities and housing associations have to balance their books without taxpayer support. One couple from Hackney contacted me to say that they currently live in a three bedroom terraced council house, with their nine year old child; plus regular visits from the children of a previous marriage. Their monthly rent, on joint annual incomes of just over £40,000, is £720. In a similar private rented property that would more than treble to £2300.

Following speculation that Ministers would introduce a ‘taper’ to the increases, this is now going to be forthcoming. But when it came to light last Thursday, four months after the end of a government consultation, there were no details of how it would work and on what basis. A concession on the taper would of course, be better than nothing, but even this could be a disincentive to look for a better paid job or work longer hours.

It should also be for local councils, as it will be for housing associations, to take decisions on charging differential rents according to income; or indeed, other circumstances. A two person household is different from a family with children, those with an elderly relative living with them, or both.

Labour believes that several factors should be taken into account in any scheme, including affordability and the need to promote socially cohesive and mixed communities. Any taper should require ‘high income’ to be set by reference to the top quartile of incomes in the area – not a countrywide formula.

Such amendments to the Bill, along with others we will press against Conservative plans to severely limit secure tenancies, are essential. Especially if those on modest incomes are not to be hit by unreasonably high rent increases or left in great uncertainty as to how long their house or flat can remain their home.

Lord Jeremy Beecham is a member of the Shadow Housing team in the House of Lords. He tweets @JeremyBeecham